Stocks to watch at the open

Keep an eye on mining firms and REITs today.


Iron ore lost 1.4% to close at $131.90 and is now down over 4% for the month of September.

Majors iron ore producers, BHP Billiton (BHP), Rio Tinto (RIO) and Fortescue Metals Group (FMG) could all be under pressure today.

A stable iron ore price and equity market strength has supported recent gains in the miners. But a fall in the iron ore price and general concerns over a US budget meltdown could have them out of favour with investors today.

Materials were hardest hit on the S&P 500 and FTSE 100 losing 1.19 and 1.58% respectively in Friday’s session.

BHP is up 18%, Rio Tinto is up 25% and Fortescue is up close to 70% from their June lows.

Australian Retail Investment Trusts (REITs)

The falling long-term bond yield looks like it will give bond-like investments such as Australian Retail Investment Trusts (REITs) renewed investor interest. The yield on the US 10-year Treasury Note has slipped another 0.02% to be trading at 2.62%.

The REIT index has gained 1.5% in September. If bond yields continue to fall, the sector is well placed to experience further gains from current levels (see Warning signs on A-REITs).

Since 5 September, the yield on the US Treasury Note has declined from 2.99%, a loss of over 12%.

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